A budget is a simple plan according to which you are going to spend your money. Mainly, a budget is based on your income, your expenditure and is a plan for saving in the near future. By budgeting, you will always know in advance about the money you have and the things you would be able to do with the money. By following a budget, you can keep your finances on track and can remain away from debts. A budget will help you in spending sensibly and thus enable you to save for your future.

Monthly Budgeting and its necessity

A monthly budget is a simple plan to determine the income in a month, expenses in a month and determine the savings if any. Monthly budgets can also be referred to as household budgets or personal budget which is a list of the expected income and expenses in the household. This will help you in planning on how your money would be spent or how the money would be saved. A monthly budget would help to set the guidelines on how much expenditure must be done on a particular category of household items. Whatever may be your monthly income, it is necessary to prepare a monthly budget to control your finances.

Why do you need a monthly budget? Let us find out the major reasons for the need of a monthly budget.

Control over your money

When you are preparing your own monthly budget, you will feel like your control over your money is increasing. When you have a clear idea about where your money is being and how much is being used, you can feel the authority and control over your finances.

Determination of areas where savings are feasible

By a monthly budget, you can easily find out those areas where you are making expenditure unnecessarily. It would direct you in using your money in only those areas where it is necessary and thus help you in finding out areas where money can be saved.

The idea about your future expenses

With a monthly budget, you can easily find out the different categories where you are spending your money and the amount of money spent. You can easily have a clear idea about your future expenses very easily.

Easy in finding out any malicious acts

When you check and maintain your budget regularly, if there have been any suspicious activities with your accounts such as any unknown deposit, withdrawal or expenditure; you would be able to determine it easily.

Reveals wastage

By creating a monthly budget, you would be able to focus on those areas which are mostly ignored or neglected by most people in daily lives.

Financial Goals

By making a budget, you are preparing an intentional choice on your categories of expenses and the number of expenses. You determine what will happen to your money and how it will be spent. This will help you in having a clear picture of your financial goals and you will put in your efforts to achieve your financial goals faster.

Reduces stress

Finances are one of the major reasons for creating stress in the lives of common people. When the expenses are in a planned manner and there is the scope of savings, the stress reduces and you feel empowered.

Financial Education

By the creation of a monthly budget, money can be considered as a tool that will help in achieving long-term financial goals in life.

How to create a monthly budget?

Let us check out the step-by-step procedure in preparation for a monthly budget.

Step#1: Make a budget in advance

It is quite essential that you prepare your monthly budget in advance before the month starts. This will help you in meeting the real purpose of monthly budget creation i.e. moving ahead with money and moving ahead in life.

Step#2: Set your financial goals

You should be clear about your financial goals and set them in advance before the creating of your monthly budget. Financial goals are of two categories i.e. immediate goals and Long term goals. Immediate goals are those that require the use of the money instantly for fulfilling the requirements whereas long term goals deal with the income and expense which span over a decade.

You will have to classify which goals are an urgent necessity and which are luxurious goals. Your current expenses are your immediate financial goals such as food; child care, cell phone, household items, car loans, utility bills, etc. are the urgent necessities and need to be fulfilled immediately. Long-term goals are your future plans like retirement savings, investments, etc. which do not need immediate action but will be one of the major objectives of the monthly budget plan.

Step#3: Determine your income

Now after you have determined your financial goals, you need to follow steps to achieve your financial goals. For this, you will have to determine all your sources of income. You can make a list of all your sources of income and add up the numbers to obtain the final income.

Step#4: Identify your expenses

In the next step, you need to identify your expenses and expenses mainly fall into the below-mentioned categories:

  • Fixed committed expenses that have a fixed amount every month such as a mortgage, rent, health insurance or vehicle insurance, etc.
  • Variable committed expenses which occur every month but the amount is different for different people.
  • Discretionary expenses are optional expenses like recreational and expenses related to the environment.

Step#5: Analyze your expenses

The most important step involved here is to ensure that the expenses you are making do not exceed your income. If your expenses are exceeding your income then, you will have to make certain adjustments to the budget. In such a scenario, you can just make some adjustments in the discretionary expenses and adjust your budget accordingly.

A monthly statement of your bank account would help you track your income and expenses and then track the necessary expenses accordingly.

Step#6: Revisiting the original budget and check progress

When you have created a monthly budget regularly for a certain duration like 2 months or 3 months, you can easily find out those areas which will need certain adjustments. Initially, you may not be aware of certain expenses but they have come up so, you can start including them into your monthly budget. You can make adjustments according to the requirements but you should ensure that the inflows and outflows must remain balanced.

Review of your budget within specific intervals is necessary as there are always certain changes in your income and expenses like a promotion or a layoff, car repairs, or some other expenses. Savings must be a part of your entire budgeting plan and it is wiser to create a separate contingency or emergency fund where you can save for certain unprecedented situations like loss of a job or medical issues, etc.

Step #7: Commitment towards the prepared budget

Creating a monthly budget is important and committing to that budget is even more important. If a monthly budget is made then your expenses should also be made according to that budget. You will have to remain realistic and make adjustments to the budget whenever necessary.

How to monitor monthly expenses and income?

It is necessary to monitor and track your monthly income and expenses. This will help you in getting a clear idea of where your money is going and where it should ideally go.

Check your account statements regularly

This is highly essential and will help you in determining your spending habits, where you are spending and how much you are spending. You should be very clear about the cash inflow and cash outflow in order to have control over your finances.

Categorization of your expenses

When your expenses are properly categorized, it will help you in having information about how much you are spending on which items. This would be helpful in making adjustments into your monthly budget if your expenses outgrow your income.

As said earlier, expenses are mainly of three major categories i.e. fixed expenses, Variable expenses, and Discretionary expenses. Fixed expenses are specific and would happen every month, variable expenses may vary from person to person and discretionary expenses are the ones that are adjustable.

Use of budgeting apps

There are different methods by which a budget can be created, tracked and even monitored. The most conventional method of budgeting is by the use of a notebook and pen. It is the simplest and least expensive method of budgeting. However, this method needed a lot of effort and time. So, there have been innovations in the field of budgeting and new, fast methods have been developed for budgeting i.e. budgeting apps.

There are numerous budgeting apps that will help you in creating a monthly budget and monitor your expenses. These apps will enable you to allocate a certain amount of income every month on the basis of what is being paid and what is being spent. You can log in to your purchases, input the time period and stick to your budget. These smart apps are an intelligent method to track, monitor your expenses and even create your monthly budget.

Maintaining other expense trackers

In case you are not much interested in the use of apps for tracking your expenses, then you can explore various other expense trackers that are available. Another alternate method to track expenses is through the use of spreadsheets. Spreadsheets also form an efficient expense tracking tool and can give a clear picture of your expenses and spending. They help in tracking, monitoring your monthly budget in a very organized manner. In addition to spreadsheets, there are various other budgeting and expense tracking tools available online which form an effective way of tracking expenses.

Make changes and adjustments

When you are tracking your expenses, then the next activity involved would be making changes and adjustments into the budget. You should be open to making changes and adjustments whenever needed in the budget as that is the most effective way of managing your finances. When you find the areas where you are spending more but those can be avoided, then you can make changes into your budget and spending habits.

So, by tracking and monitoring your expenses, income is really helpful and would bring a positive impact on your finances gradually.

Top 10 mobile apps and tools for monthly budgeting

Today, everyone is interested in planning their finances, tracking their expenses and saving money. The old conventional methods of maintaining records about your income and expenses, making notes on the unexpected expenses, etc. are time-consuming and cumbersome. The modern age is the age of technology and the tech world has noticed the need for technology in the field of budgeting and finance planning. So, there are various mobile apps and tools available which make monthly budgeting, tracking and monitoring expenses very easy.

Let us have a look at some of the popular mobile apps or tools which are widely used for monthly budgeting.


Mint is one of the best apps available for budgeting and expense tracking. Mint will help you in budgeting by categorization of the expenses in an automatic manner and create a picture of the expenses that have been done in real-time. You will be able to add up new categories according to your requirements, track your bills, split your transactions and even set the budgets in such a way that would provide an alert if the expenditure is exceeding the set limit. By the Mint app, you can also have checked and monitor your credit score free of cost.

Pocket Guard

Pocket Guard is a different type of budgeting app which helps in providing you with the exact amount which you have to spend. It will show the amount left out for spending after it has calculated the bills, other spending and the part which would be contributed for savings. You can have information on how much money is left in your pocket depending upon your choice of a week or a month.


By the Goodbudget app, you will portion out a specific portion of your income for particular categories. If there is one account on the app, many members of a family can use it for having access to the monthly budget of the house. Here, you have to manually add up account balances, your debts, and cash amounts. This app is not synchronized with your bank account and all the data needs to be entered manually. You will also enter the amount which is to be assigned to various categories for spending.

Clarity Money

Clarity Money is a budgeting app by which you would be able to link your bank accounts from different banks. By Clarity Money, you will be able to track your expenses, organize your expenditures into various categories. You can also use this app for viewing your credit score and monitoring your credit score.

Personal Capital

Personal Capital is an investment tool that also has budgeting features. It helps in checking the savings account, credit card accounts and other details related to financial accounts. There are various categories present and you can customize these categories to find out the total expenditure in each category.

Financial Calculator

A financial calculator is a financial tool that helps in preparing a budget for the future. This app consists of a collection of calculators that can help you in many calculations along with budget creation and expense tracking. It consists of loan calculators, return-on-investment calculator, etc.

Google Sheets

You can consider Google Sheets’s method of budgeting as the old school method but they are reliable and as good as the other mobile apps used for budgeting. You can easily fill in the sheets with data like income, expenses and other necessary data. By using these data you can easily find out how much you have as income and how much to spend. Google sheets are like the office apps, simple and a very secure method for tracking expenses and budgeting.


Monefy is a simple budget app that makes adding new data quick and easy. You can obtain various other features like an in-built calculator, dropbox integration, password protection, currency support, etc. You might take some time to learn about the app but once acquainted you find it quite easy to use.

My Budget Book

My Budget Book helps in detailed budget creation and expense tracking. It helps in collecting all basic details and can also set up the limit for each category. This app is customizable and you can export the file to HTML or CSV according to your requirements. It has a material design interface and you can obtain offline support for operating it whenever needed.


AndroMoney is a very successful expense tracker and even offers cross-platform support in the case of web and iOS. The design for AndroMoney is very clean and the analytics are presented in a very logical manner. This app works absolutely well and has features like multiple accounts, support for various currencies, back-up to Excel, budgeting functions, etc.


Hence, budgeting and keeping a track of your expenses are highly essential. It gives you the confidence of having control over your finances. Creating a monthly budget will help you in having a clear picture of how much money has been coming in and how those funds would be used. Budgeting and tracking your expenses act as an effective tool in building a successful financial future and helps you get the most out of your hard-earned money.